Koolaid Discussion Zone

[Ninja7]

Advanced Monkinar Review

Disclaimer:
All of the stuff below is simply my opinion based on my attendance of the PHX Advanced Monkinar in March of 2010. While there is a significant amount of controversy surrounding Monk (aka Jerry Williams) and some of the companies he chose as stock picks, my goal is to ignore that as much as possible and provide an objective review of a Monkinar. If you’re interested in my personal opinions of the whole FLD idea and how Monk handled the whole thing, you can read them here (http://investorshub.advfn.com/boards/read_msg.aspx?message_id=56176616) and here (http://investorshub.advfn.com/boards/read_msg.aspx?message_id=56388350). Suffice it to say that I no longer consume the Koolaid.

The PHX Monkinar was the first advanced one held (before the basic Monkinar became a required prerequisite), so I have attended only the advanced. The primary extras provided at the advanced (compared to the basic) are a day of “live” trading and focus on faster time frames (e.g. 1 minute charts as opposed to just 5 minute and above charts).

Finally, given that people are paying their hard earned money to learn what is taught at a Monkinar, I will not reveal any details of Monk’s system.

What you will Learn
I estimate about a quarter of the time was devoted to hearing stories of how people discovered Monk and why they were attending a Monkinar. Another quarter of the time was devoted to looking at the stock charts of various hope stocks that individuals in the group had invested in (i.e. stocks that you hope go back up some day but probably never will). Probably only an hour or so was devoted to a discussion of the infamous FLD picks and answering questions about them. The remainder of the time was devoted mainly to two things. The first was basic chart reading (e.g. things like what is a candle, what does open/close mean, etc.) and the use of a small handful of basic indicators and how Jerry uses them for swing trading in various time-frames (e.g. 5 minutes to days). I won’t get into the details of Monk’s system (as that is what you’re paying for if you go), but I will say that the system is fundamentally a moving average based system subject to the same pros and cons as all moving average based systems are. The one appealing aspect of the system Monk teaches is that it is extremely simple and easy to follow. The bigger question is if it actually works (more on this later). The second thing you’ll learn is how to daytrade (or swing trade) leveraged ETF’s like FAZ/FAS and QID/QLD in both 5 minute (and above) and 1 minute time frames. You’ll also get to see Monk trade a live market using a 1 minute chart.

Aside from the above stuff, you will get to meet a lot of nice people and get to know some of the faces behind the names on the message boards.

What you won’t learn
You won’t learn about more than 3 or 4 basic indicators. For those of you interested in the math behind these indicators, you won’t get that either.

You won’t learn how to do anything with indicators besides use them for Monk’s system (e.g. you won’t learn how to detect bullish and bearish divergences, etc.).

You won’t learn about basic chart patterns (e.g. head and shoulders, flags, pennants, double tops, etc.) nor will you be taught how to draw a correct trend line or channel.

You won’t learn how to conduct scans or search for your own plays.

You won’t learn about level 2 quotes or how to read and use them.

There is no discussion of different order types beyond market and limit (e.g. trailing stops) nor is there any discussion of money management (e.g. enter or exit a trade in pieces as opposed to going all in or all out at once). There is no real discussion of limiting losses (e.g. when to exit a failing trade or how to use a trailing stop).

There is no discussion of how to use basic put/call options to trade the ETF’s to achieve even additional leverage beyond what you get with the 2X and 3X ETF’s (or for protection in longer term trade).

One other thing worth noting about the live trading day is the following. The concepts of slippage and bid/ask spread cost is never really addressed during the live trading. Monk would simply call out that he was entering or exiting a trade now, and someone would note the price. Unfortunately, this ignores the fact that the entry would have been at the ask and the exit at the bid, and the spread as well as a roundtrip commission would have been lost on the trade. So trades that were considered break-even or small losses would actually have lost a bit more in real life. This tends to obviously bias the results some.

Does it the system work
Monk claims that his system produces winning trades over 82% of the time (if you follow his rules) and can make 3%-5% a day or more trading a 3X leveraged ETF. FWIW, here is my opinion: I have a degree in engineering and use NinjaTrader for trade strategy development and back testing (although not for actual trading). I coded up Monk’s ETF rules and back-tested them against the FAZ/FAS, TNA/TZA, and QID/QLD for the past year. If you just use Monk’s rules as is (in a 5 minute time-frame and close out everything everyday), his system does about break-even (the 1 minute version is worse). Like most moving average based systems, it tends to do fairly well during trending markets and very poorly during range-bound , flat, or choppy markets. In my opinion, to make the system work, you’ll need to enhance it in some manner to get more reliable entry/exit signals or to filter out trading during non-trending markets (either via additional indicators or personal discretion from looking at the chart).

Conclusion
One thing I’ve learned in my short stint so far as a part-time trader is that making money consistently in the market is very difficult at best. Most successful traders are wrong a lot (sometimes as much as they are right). They make money by controlling the loses on the wrong decisions and maximizing the gains on the good ones. If you really think you can go to a weekend seminar and learn some magic trick that will have you making 5% a day every day, you’re most likely just setting yourself up for failure. Monk made the claim at the Monkinar that he’s never had a losing day while day trading. While that is probably impossible to refute, it seems difficult to believe.

Anyway, that’s my take on the advanced Monkinar. I actually don’t have big regrets about going. If I had it to do all over again, I would, however, invest my money elsewhere. My suggestion to you is this: Like you should before investing in anything like this, do a little shopping around and some due diligence before plunking down a few thousand dollars. There are other options.